Employment Law Partner

Wed 17 January 2018

The sudden and public collapse of Carillion has sent shivers up and down the spines of thousands of employees all across the UK whether they work for Carillion directly, or, more likely, whether they work for a subcontractor which has been appointed by Carillion to work on one of the many contracts it manages as part of its outsourcing business.  The contracts the business is involved in stretch from delivering school dinners in Oxfordshire to building the new Royal Liverpool Hospital.

The media reports that Carillion subcontracted out virtually all of the work required to deliver on the contracts it entered into, and was a habitual late payer of invoices, so it seems likely that a number of hard-pressed construction and maintenance businesses may be considering making redundancies or laying off employees. 

There are some crumbs of comfort for employees that find themselves in a worrying situation.  The law requires that a business contemplating making redundancies of 20 or more staff at one location must carry out an enhanced consultation procedure in good time before those redundancies can actually be put into effect.  One aspect of the consultation is to focus on reducing the number of those staff to be made redundant and to mitigate the effects of the redundancies on those that are selected.

But what happens when the first that the workforce hear of the problems is when they are summoned to a meeting by administrators, liquidators, or ACAS, to be told that the business has ceased trading with immediate effect and the vast majority of staff are no longer employed?

The law has safeguards to protect those who have been dismissed following a complete or near-complete failure to consult them.  Employees should take steps by consulting a solicitor to protect their position.  Provided there are more than twenty employees at one location, a group claim for a “protective award” can be made to the Employment Tribunal.  Your solicitor will check each individual employee for eligibility and give an estimate of what might be recovered per person. 

The claim, which is almost always undefended by the wounded business, then may progress to a Judgment in favour of the employees in the Tribunal.   The “protective award” is paid by the Government where the employer has ceased trading and become insolvent, subject to certain caps and limits, but the amount recovered by each individual employee could be up to eight weeks’ gross pay, in addition to other sums paid by the Government’s Redundancy Payments Office such as holiday pay.

Luke Hutchings, Partner at Taylor Rose TTKW, says “too often employees who are made redundant en masse are unaware of the power they have, as a group, to gain extra compensation paid by the Government for the manner of their dismissal without consultation.  Many of these employees have paid into the National Insurance fund for years and are entitled to claim the compensation available for the sudden and shocking way in which their services were dispensed with .”




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